Fraud Prevention

‘Tis (Almost) The Season: 9 Ways to Guard Against Fraud
By now, holiday online retail trends should be no surprise to merchants: both sales volume and fraud rise dramatically. Last year, fraud attempts were up over 30% during the holiday season, and the trend is sure to continue in the 2017 holiday shopping season.

Merchants should keep tight reigns on fraud prevention and risk mitigation year-round; however, the holiday season often calls for extra measures. While we’re still several months out from the peak period, merchants need to start thinking about fraud prevention measures now to be prepared in time. We’ll break down nine different ways online merchants can prevent fraud this holiday season – and beyond.
1. MasterCard SecureCode and Verified by Visa – These are both 3D Secure protocols that ensure the person attempting the purchase is the owner of the card prior to authorization. Not only do these tools cut down on fraudulent transactions, but they boost consumer confidence that their information is being verified and protected.
2. Address Verification Service (AVS) – This is another tool that validates whether the person using the card is the cardholder or not. It works by validating the billing address offered at the time of purchase with the one on file with the issuer during authorization. If the authorization is approved and the AVS response indicates a match, merchants can proceed with the transaction.
3. Card Verification Value 2 (CVV2) – This protocol requires the purchaser to enter the three-digit security number printed on the back of a Visa card to verify that the customer making the purchase is in possession of the actual payment card.
4. Tokenization – Payment tokenization eliminates the need for merchants to handle or store payment data. Instead, sensitive payment data is replaced with a unique identifier – called a “token” – while the actual payment data is stored in a third party data center.
5. Chargeback alerts – Some third party solution providers offer chargeback notifications that alert a merchant when a dispute is filed with an issuing bank in the solution provider’s network. This gives the merchant an opportunity to handle the dispute directly with the customer rather than after the entire chargeback process has already occurred. Since chargebacks result in fines and penalties for merchants, it is optimal to address disputes before they turn into chargebacks.
6. Device fingerprinting – A device fingerprint is a pattern of online behavior that is identified and attached to a particular device. It can be used to identify devices which have previously been known to commit credit card fraud or online identity theft, making it easy to block purchases and transactions from those devices.
7. IP geolocation – IP geolocation can be used to identify anomalies in CNP transactions that may signal fraud. For example, if a billing address and zip code associated with Chicago is entered during the purchase authorization, but the IP address is located in Brazil, this could signal possible fraud. Depending on the type of tool, it may block the transaction altogether or route to a manual review team for further research.
8. Behavioral modeling/profiling – Some third party payment solution providers have created algorithms based on machine learning technology that enable behavioral modeling and profiling. This rules engine can identify and detect potential fraud based on anomalies to established behavioral patterns associated with payment card data. When “out-of-the-ordinary” patterns or behaviors are identified, the engine alerts the merchant to the inconsistency. From there, merchants can decline the order or submit to manual review for further authentication.
9. Big Data – Merchants can tap into multiple data sources in real-time to identify inconsistent or anomalous transaction behavior. Some tools gather social data to detect inconsistencies in location or other identifying information. Some solution providers offer access to negative information databases and behavioral databases, which merchants can use to sniff out suspicious orders and route them for additional verification or review.
The best bet for merchants looking to curb fraud this holiday season is to employ a tailored combination of some of the tools and protocol listed above depending on their unique needs. There is no silver bullet when it comes to fraud prevention, but having a fine-tuned, layered suite of tools that can be adjusted in real-time proves to be the most effective strategy.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

fraud-prevention
Top Ecommerce Fraud Prevention Tricks for the Holidays

The holiday season is the most important time of the year for online businesses. While an increased number of shoppers are perusing ecommerce sites, an increased number of bad actors are, too. Even though Christmas is behind us, the holiday selling season is not over. Many consumers will take advantage of post-holiday sales and begin redeeming gift cards received during the holiday season (typically spending more than the gift card amount). Without the right ecommerce fraud prevention tricks, merchants are at risk for serious losses. It’s important to have the right tools in place to combat fraud year-round, but merchants are especially at risk during this busy time of year.

ACI Worldwide found that attempts to commit fraud online during the 2017 holiday season increased by 22% year-over-year. Additionally, the company found that overall online transactions were up 19% compared during the 2017 holiday season compared to the 2016 one.

This research helps to paint the picture of how prevalent fraud is in the online retail world nowadays as cybercriminals capitalize on ecommerce sites’ vulnerabilities. Here are the best ecommerce fraud prevention tricks your business should implement for the holidays.

Clearly Defined Rules and Communication

Every person involved in helping your online business run smoothly should be trained to identify potentially fraudulent activity. They should also know how to handle these situations, including working with other departments in separating true fraud attempts from false alarms.

One of the top ecommerce fraud prevention tricks is to create checklists designed to minimize risk. These checklists can be shared with team members and help to identify situations that may throw a “flag”. This may include an unusually high number of orders originating from a certain location, inconsistent patterns in purchasing behavior, or other suspicious activity. Staff should also be aware of processes for approving and declining orders as well as escalation paths for each situation.

Ideally, business owners should train each staff member to understand the fraud-prevention tools that have been implemented. This can streamline operations when orders are rushing in. It is much easier to maximize legitimate sales if each team member knows how to identify potential fraud and react to suspicious activity to prevent chargebacks and loss merchandise from taking a bite out of business.

Similarly, every team needs to be aware of what is going on during the holiday season from a marketing perspective in order to identify whether or not online traffic increased due to holiday promotions and coupons or nefarious activity. Everyone should be aware of new product releases and volume expectations to ensure that legitimate sales are not being declined due to a misunderstanding.

This is one of the most important ecommerce fraud prevention tricks as keeping the lines of communication open across multiple teams can help every staff member identify and flag fraudulent activity in real-time.

Monitor Transactions and Fine-Tune Fraud Controls

The best ecommerce fraud prevention tricks help merchants stop fraud and chargebacks, saving thousands of dollars in losses during the holidays. Monitoring sales during the holidays is integral. Ecommerce businesses should monitor accounts and transactions for any potential red flags, including billing information that differs from the shipping address.

Automated fraud prevention tools run the gamut. Consider implementing tools that identify customer IP addresses. Geolocation tools can identify transactions originating from a country that is known for fraudulent activity. Alternatively, they can also identify “high-risk” IP addresses that have been flagged for fraudulent activity in the past.

Minimize False Declines Without Sacrificing Security

Flagging “unusual” activity can be a slippery-slope for businesses during the holidays and may hamper seasonal earnings potential if fraud controls are too strict. Merchants can research the types and patterns of transactions the business experienced during the previous holiday season to help anticipate what may be expected this year. These learnings can help inform settings for fraud tools to ensure that legitimate transactions are not unnecessarily declined.

Also consider additional steps to take rather than declining a suspicious transaction outright. Instead of flagging a transaction or escalating a dispute, merchants can request that the customer authenticate themselves through additional means to confirm their identity. There should be a healthy balance between enabling frictionless transactions and properly authenticating customers. Onerous checkout experiences can impede on the customer experience and damage a brand’s reputation.

Bulking up customer service teams another way to manage customer expectations and reduce fraud. Having a well-staffed team to handle customer questions and concerns can alleviate the stress customers feel, leading to a better brand experience. It can also reduce post-holiday chargebacks from customers who use the dispute process because they were unable to easily contact a business for returns or other issues.

Our team at PayArc can help you enjoy a smooth and profitable holiday season as we implement the top ecommerce fraud prevention tools in the industry. Contact us today to see how we can help your business reduce fraud and boost sales this holiday season.

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Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security, Technology

fraud-prevention
Top Tips for Evaluating Merchant Account Providers

There are plenty of merchant account providers out there to choose from, making it a difficult task deciding which one is right for you. Different business models require different considerations to ensure that payments are optimized and payment processing costs remain low.

Working with a trusted merchant account provider can help a business streamline payments for customers without breaking the bank. The key is finding the right fit, not only in price, but in an advisory capacity as well.

Here’s what you should consider when evaluating merchant account providers.

Consider Fee Structure

There are several different types of payment processing rates offered by merchant account providers. Interchange plus pricing represents the interchange rate that payment processors pay for each transaction plus a markup. In this way, payment processors pass along the fees they pay plus an additional markup to the merchant. The markup will vary among merchant account providers, so it’s important to look for a rate that is reasonable for your business.

Other pricing structures include tiered pricing and blended pricing. Each type of pricing has different considerations so it’s important for merchants to do their homework, ask questions, and consider any other fees that may be insured before signing on with a merchant account provider.

Additional fees to consider include application fees, per-transaction fees, monthly minimums that affect your fees, voice verification charges, address verification fees, statement fees and more. Most merchant account providers will be flexible in terms of how they present your proposal, which could result in a lower discount rate with a higher per-transaction fee if your average ticket price is on the low side but your transaction volume is high.

Consider the Equipment

You should also pay heed to how much your merchant account provider is charging you for the equipment and the software to process your transactions. The price of equipment can vary in cost among multiple processors by hundreds of dollars, even for the same piece of equipment.

Some merchant account providers may offer the option to purchase equipment outright or to purchase term-contract with the equipment. Each options has different benefits and drawbacks, depending on the needs of your business, so be sure to get clarity around the pricing and features of each before signing a contract. Make sure you research the equipment and software you’re using as well; a good merchant account provider will be able to answer your questions and make recommendations in terms of the best equipment fit for your business.

Choose a Dedicated Your Merchant Account Provider

Take note of how hands-on a merchant account provider is during the application process. Some merchant account providers simply offer merchant accounts, pending a successful application. Other merchant account providers provide additional benefits and act as a trusted advisor in dealing with everything from chargeback management to fraud prevention and more.

The response time of your merchant account provider matters a lot too as it can affect your business’ customer service levels. Consider whether or not the merchant account provider is available 24/7 or if there will be long wait times to get a hold of someone who can help. Is the merchant account provider knowledgeable in all areas of payment processing or can they only help answer questions about certain things?You know your business better than anyone else, but it can be helpful to retain a merchant account provider that is invested in learning your business and helping to optimize payments.

Reputation and Communication Matter, Too

When choosing a provider, listen to what they have to say and focus on the level of detail they’re providing you with from the start.

Your merchant account provider should keep you informed of any changes in their policies, new laws that affect credit card practices and promotions that can help you save money. Ask about their communication with you and how these would work, as well as what features and services they offer.

When evaluating merchant account providers, look at each option holistically. While rates are important, they should not be the only measuring stick when it comes to finding a trusted partner. Look at quality and speed of their services, rates and fees, and level of customer service. You want to strike that perfect balance between experience, quality and affordability that very few providers can actually offer. The best merchant account providers will understand nuanced business models and be able to offer sound advice on the best way to streamline payments.

Payarc

November 15, 2021

Fraud Prevention, Industry Insights

payment-processing
Visa International Card-Not-Present Interchange

Visa has specific interchange for transactions that occur using an international card in a card-not-present environment. The term“Card-Not-Present” refers to credit card transactions where the card is either keyed in (as in, the EMV chip is not inserted into the terminal or the magstripe isn’t swiped through the terminal) or the transaction is taking place online (where there is no terminal). These transactions tend to have higher interchange rates because they are more susceptible to fraud.

Visa refers to international card-not-present interchange rates as “international secure ecommerce interchange rates.” The rates change depending upon what type of card is used.

Secure eCommerce refers to online transactions that take precautions in protecting cardholder information by checking AVS or asking for the CVV. If someone uses a Visa Classic (the simplest credit card Visa offers, offers no rewards), Visa Gold (Visa’s mid-level credit card) or Electron (a Visa debit card that cannot be overdrawn – this card is not available in the United States), then the interchange rate for a secure ecommerce transaction is 1.44%.

If a customer uses a Visa Signature or Visa Premium(higher spending limit, cardholder benefits) card, then that interchange rate is 1.80%. For Visa Infinite, a card offered to cardholders with a high net worth that comes with a range of luxury benefits, the rate is 1.97%. Finally,the rate for a commercial Visa card is 2.00%.

It is useful to be aware of these rates, particularly if you run an online business that sells mostly to international consumers.Similarly, it is recommended that you take some precautions to protect cardholders from fraud; e.g., make sure that your transactions are secure according to Visa’s rules and regulations, so that these rates don’t increase even more.

Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

interchange; visa; ecommerce
What’s a Chargeback? Understanding Different Types of Ecommerce Fraud
If you are a new merchant in ecommerce, you will likely find yourself asking “what’s a chargeback?” at some point. Chargebacks are an unfortunate reality for online merchants, though with the right knowledge and planning, chargebacks can be minimized. A chargeback is happens when a customer disputes a charge with their payment card issuing bank and the bank refunds the transaction to the customer.

Thoroughly understanding the answer to the “what’s a chargeback” question can help a merchant prepare. There are various types of chargebacks, but all have negative consequences for merchants by way of fines, fees, penalties, and damage to a business’ reputation.

If the “what’s a chargeback” question is still perplexing to you, don’t worry. We’ll walk through the different types of chargebacks and how you can avoid them.

“What’s a Chargeback?” Type #1:True Fraud

When evaluating the types of chargebacks, the first term you need to understand is true fraud, or unauthorized use. This happens when bad actors use stolen payment card information to make a purchase and the true cardholder files a chargeback to dispute an unauthorized charge.

This type of chargeback typically occurs as the result of identity theft of card skimming. Fraudsters gain access to a cardholder’s payment card data and use the information to make unauthorized purchases, which the cardholder becomes aware of when reviewing the monthly statement. In some cases, however, unauthorized use could be the result of a family member making a purchase without the actual cardholder’s knowledge. This is a less nefarious type of chargeback, but just as costly for merchants. Simple miscommunication among family members could result in a chargeback that costs the merchant in lost merchandise, shipping fees, and fines incurred by the card networks.

“What’s a Chargeback?” Type #2: Friendly Fraud

Friendly fraud is not “friendly” at all. This happens when a customer seeking a refund chooses to bypass the merchant and go directly to the issuing bank in an attempt to achieve the desired outcome. This can occur if a merchant has a confusing or “unfair” return/refund policy—or if the merchant has no refund policy at all.

After receiving the product, some customers may claim that they were unaware of the purchase or say that they never received the product or say that they returned the product without receiving credit for their return. Simply put, the customer could be looking to use the product or service without paying for it.

In these cases, customers claim they never received the product or were unaware of the purchase, even after receiving the merchandise. In some cases, a customer may claim they returned the product and did not receive a credit for it. This can happen with digital services as well. Regardless of the type of purchase, the customer is seeking to defraud the merchant through dishonest means.

This type of chargeback can be combated by having clear returns and refund policies that are clearly listed on the website. Having excellent shipment tracking and delivery confirmation that requires a signature can also aid in avoiding and/or fighting these types of chargebacks.

Tips for Preventing Chargebacks

Here are some tips we have compiled if you’re looking to prevent chargebacks:
- Use Proper Authorization Protocol: When processing card-not-present (CNP) transactions, use AVS and CVV2 to confirm the purchaser’s identity. Protocol like 3D Secure 2.0 can add an extra layer of security to online transactions and cut down on chargebacks.
- Make Sure the Billing Descriptor Is Clear: Many disputes happen because of confusion or miscommunication. Merchants can eradicate these types of chargebacks by using clear billing descriptors, which include the merchant name (DBA) and other details that identify your business. When the customer checks their card statement after making a purchase with you, there will be less confusion about when or with whom the purchase was made
- Clearly Present T&Cs and Policies: Having clearly articulated and posted terms & conditions, return policies and refund policies can cut down on chargebacks.
- Optimize Customer Service: Merchants should have properly staffed customer service phone lines that minimize wait times. Allowing customers to contact by email can be beneficial as well—so long as emails are promptly (within 24 hours) returned. Also consider implementing chat lines to quickly address customer issues.
- Work With a Reputable Payment Processor: Working with a trusted payment processor that offers consultative services regarding chargeback management can save merchants hundreds of thousands of dollars in the long run. Having a chargeback prevention plan—and a chargeback management strategy—is essential to guarding hard-earned profits from true and friendly fraud.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

chargebacks
What’s the Difference? Retrieval Request vs. Chargeback
Perhaps you spent a restless night, and awoke with a glimmer of the nightmare that kept restful slumber at bay. That lingering memory nagged repeatedly at the edges of every waking thought today.

Is that why you stumbled a bit when delivering the new training session during your employee meeting this afternoon? A word hovered just out of reach… On the tip of your tongue… Until zing, there it was.

You retrieved the word just in time and pulled it off. Not another hitch in your delivery — every speaker’s nightmare averted. Congrats!

If only transaction information was as simple to retrieve, not scattered around your office or floating somewhere in the Cloud. Easier access to the online orders processed last month, the confirmation emails sent, and the shipping notices you’re sure went out, but can’t seem to find…

…Would make answering the retrieval request received this morning so much simpler. You’ve never gotten one before, and aren’t sure what it means or why it’s important to respond so quickly.

If you can’t explain retrieval request vs. chargeback to yourself, much less to your team, keep reading. Then, work on getting your data ducks in a row.

Retrieval Request vs. Chargeback — How They Differ

When payment card statements arrive each month, cardholders sometimes don’t recognize charges. What’s the cardholder to do? Often, they ring the issuing bank to say they don’t recognize a charge… Setting in motion a request by the bank for information in support of the transaction.

A retrieval request is simply a request by the bank for information to support the transaction. The bank wants to see legible copies of the actual sales ticket (or online order), and the transaction authorization.

(American Express calls these requests “inquiries” while Visa, MasterCard, and Discover use the label “retrieval.” Some banks call them “soft chargebacks” — your first clue to why retrieval requests matter.)

Of course, the transaction may be legitimate, but the cardholder doesn’t recognize it. Other possibilities include a processing error, incomplete or inaccurate transaction information, or the worst: potential fraud.

Merchants reply to retrieval requests by providing the requested information to the bank. Also useful is to reach out to the customer by email or phone to discuss their issue. Doing so may help to resolve it, and avoid a chargeback.

Chargebacks occur when a cardholder requests a refund for a transaction directly from their issuing bank. The customer may declare the transaction illegitimate, because the goods weren’t delivered — weren’t as advertised — or arrived damaged — and she demands her money back.

The issuing bank supports the cardholder and contacts the merchant’s bank to put a hold on transaction funds. The cardholder receives a refund, and the merchant receives a penalty in the form of a chargeback fee.

Merchants can dispute chargebacks by providing transaction records, shipment records, proof of delivery, copies of any correspondence with the customer, and proof of money transfer — if the merchant already refunded the purchase.

Specific and limited timeframes for response vary, and must be honored.

If the documentation he provides supports the merchant’s dispute, a chargeback reversal occurs.

Is it any wonder that good record keeping is important? Responding to retrieval requests or disputing chargebacks efficiently and timely become more difficult when your data ducks aren’t organized into nice, neat rows.

Managing chargebacks well improves your online business success. Read more chargeback basics here, including steps to take with your website, business processes, and data to help prevent fraud-related chargebacks.

Why You Should Care

The good news about retrieval requests is that no money changes hands — yet. A retrieval request simply means that a cardholder or the issuing bank needs more information about a transaction.

But the bad news is that a retrieval request denotes the first step in the chargeback process. If you don’t respond to a retrieval request within the timeframe (usually 10 to 20 days), a chargeback occurs.

Retrieval request vs. chargeback important considerations include:
- No money changes hands due to a retrieval request — yet. Merchants retain the money made from the sale during the inquiry. Once a chargeback occurs, merchants lose the money from the sale (it’s refunded to the customer) and also pay chargeback fees.
- Plan to resolve the inquiry in a timely and efficient manner. No response from a merchant means that a chargeback is issued with the reason, “requested item not received.” Should that occur, the merchant loses reversal rights for the transaction too.
- Merchants may issue customer refunds during the investigation period without penalty. Contacting the customer via phone or email to address their questions and seek a solution might satisfy both parties. If the customer doesn’t respond, issuing a refund directly may solve the problem and avoid a chargeback.
Remember that credit card brands set and enforce these rules. Keeping your online business viable is at stake, so if you’ve been ignoring the issue of retrieval request vs. chargeback, it’s time to pay attention!

Let PayArc Help

Our mission is to bridge the gap between online merchants and payment solutions — for all types and sizes of online merchants and app developers.

PayArc offers leading-edge payment processing from seasoned professionals with years of experience in the payment industry. We provide you with a customized solution that’s right for your business.

Our industry leading payment processing solution gives you all the tools you need to start accepting payments while lowering your risk to fraud and giving you some of the lowest rates in the industry.

We’ll provide you with the latest technology and pay options, allowing you to focus on growing your business.

PayArc wants to act as your payments advisor and consultant, not only your processor. Because you have a business to run… Our business is to help you run it better.

So, let’s get your ducks in a row… Start processing with PayArc today.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights

chargebacks
Why Your Payment Aggregator Doesn’t Want You to Make Money

There are many businesses that swear by payment aggregators due to the fact that it makes starting that business much easier. The payment aggregator choice has risen in popularity in recent years because it allows a merchant to accept online payments without having to set up a formal merchant account.

Payment aggregators enables merchants to accept credit card and bank transfer payments without obtaining their own merchant account through a bank. Instead, one merchant account is used by a number of merchants. But is that all there is to it?

Online statistics firm Statista predicts that more than 100 million Americans will use peer-to-peer payments in 2020 due to the convenience and simplicity that payment aggregators offer. However, there’s more that you should know about how payment aggregators operate if you choose to put your faith in the hands of PayPal or Square when starting your business.

What Should I Know About the Main Aggregators?

PayPal is the biggest payment aggregators in the business right now due to sheer volume as the service amassed $13.09 billion in revenue in 2017, per Statista. Plus, the total payment volume conducted through PayPal last year reached a whopping $451 billion. As you can imagine, the company makes most of its revenue from the fees it charges companies to conduct their business through the site and application.

Much like it rival payment aggregators, PayPal doesn’t charge you for opening an account through the site. However, accepting payments on credit or debit cards through e-commerce partners such as eBay will cost you a 2.9% fee, as well as $0.30 of the amount received for a purchase.

Square has a similar business model, although its fees are dependant on the payment method used to buy a product, which fall under swipe transactions or manually-entered ones. Swipe transactions cost merchants a 2.75% fee, while manually-entered transactions cost 3.5%, as well as $0.15 of the total transaction amount.

In 2017, Square raked in $2.2 billion in revenue from these fees. Plus, the gross payment volume of business conducted through the payment service reached $21.37 billion during the company’s second quarter of fiscal 2018.

Meanwhile, Stripe charges a 3.4% plus $0.50 of the total amount paid when your business accepts a credit or debit card payment. Payments used through its services, which include Alipay or WeChat Pay, will set you back 2.2% plus $0.35 of the payments. So while all of these options make your job easier, these fees add up in the long run, taking a considerable chunk of your profit off.

Benefits of Using an Aggregator

The most obvious benefit of choosing the likes of PayPal or Square to handle your payments is how quick the application process is. Attaining your own merchant account is not an easy process because you’ll require approval from a bank, which means that all your ducks need to be in order and then some.

Meanwhile, getting approved with an aggregator is a much shorter process that doesn’t require you to present PCI DSS compliance and every single document and license pertaining to your business. Plus, setting up your own merchant account means that you will be responsible for all the risks linked with chargebacks and fraud.

With a payment aggregator, you can start accepting card payments almost immediately after getting approval from the company. This is because setting up your e-commerce payments or even face-to-face ones with a mobile swiper on your cell phone is as easy as it sounds with an aggregator.

Plus, having a straightforward fee structure with no surprises means that you know what you’re getting yourself into. Choosing a payment aggregator may sound like the obvious choice when you consider all these elements, but there are a lot of negatives linked with companies such as PayPal that could mark the end of your business venture.

Short- and Long-Term Drawbacks Trump Benefits

There are some massive drawbacks associated with choosing a payment aggregator, with the main one being the fact that it’s very easy for aggregators to put your account on hold for anywhere from 24 hours to 30 days. This is due to the fact that payment aggregators are responsible for handling the risk associated with fraud, which means that any suspicious activity results in an account suspension.

You won’t get any warning when this happens and there are dozens of situations in which a payment may be seen as “suspicious.” For a person trying to run a business, these account freezes have a negative effect on your ability to pay employees and make other business expenses in a timely fashion.

Other problems associated with payment aggregators include the fact that they make it very difficult for high-volume merchants to operate and grow due to the fact that they have fixed rates and low processing limits. Even a small business that wants its sales to grow above $3,000 per month will struggle to conduct their work smoothly without facing some roadblocks.

Processing rates are also usually quicker through an individual merchant account as funds will be available to you more swiftly, often within 48 hours of the transaction being approved. Plus, aggregators are notorious for having poor customer service due to the high volume of businesses and individuals that they have to deal with.

If you don’t want to be held up in a queue, you’ll have to pay up to $459 a month with PayPal to skip the line, an amount that is quite similar with other services. On the other hand, the holder of an individual merchant account is more likely to give you their full, undivided attention in a timely manner without charging you extra to do so.

All in all, these popular payment aggregators do more to prevent you from running your business than they facilitate it. From fixed limits, low processing limits, account freezes and termination to additional charges that you face later on, you will spend plenty of time and money simply trying to ensure that your business runs smoothly with an aggregator.

An individual merchant account may be harder to get, but your life is much easier and cheaper once you do set one up.

If you’re hoping to find one of the simplest and most reputable payment processing services in the world, our team at PayArc walks you through the process of setting up the types of payments you receive without any surprises. Plus, we offer industry-standard encryption and the best risk-mitigation tools to ensure your business runs as smoothly as possible.

Payarc

November 15, 2021

Fraud Prevention, Industry Insights

payment-aggregators
PayArc Comments on Friendly Fraud
Friendly fraud is anything but. In fact, the friendly fraud problem continues to grow and merchants are especially vulnerable during the holidays. In some cases, it accounts for 35% of fraud loss! Jared Ronski discusses this issue and lays out tips for merchants looking to cut fraud out of the holiday mix in 2018. Some best practices include:
- Maintain better records
- Update billing descriptors to be clear
- Improve customer service
- Fight and represent chargebacks to recover revenue
At the end of the day, technology is both friend and foe. It may assist customers in perpetrating friendly fraud, but it can also help merchants streamline payments and reduce instances of fraud. Merchants should be proactive and nip fraud issues in the bud before they spiral out of control. You can read the full article here.
Payarc

November 15, 2021

Fraud Prevention, Uncategorized

chargebacks
Pricing out Payment Processors? Don’t.

It’s not uncommon for both novice and seasoned business owners to get caught up in payment processing rates. Fees associated with payment processing can add up to an undeniably substantial amount.

That said, there is far more to consider when it comes to accepting payments than payment processing rates alone. Sure, merchants should aim to get the best rate possible, but not in foregoing other important factors that can make or break their business.

As ecommerce develops, so does payment processing. In this era, there are specialized payment processors that help merchants of all types and sizes – and that cater their rates accordingly. It’s also important to note that cheaper isn’t always better. Some processors offer unbelievably low rates, only to ding merchants with hidden fees or penalties.

While finding a processor with reasonable fees makes sense, it’s also important to look holistically at the services and support provided. Merchants should engage with payment processors that can cater to their needs on multiple levels.

Beyond Pricing: Finding Your Advocate for Success

Finding a true payment processing partner means finding someone that will advocate on your behalf – with acquiring banks, issuing banks, and card networks – for your success. This may come in many different shapes and forms, which we’ll explore below.

Chargeback and Fraud Prevention Tools

Regardless of your industry and business model, chargebacks and truefraud will always be imminent risks if you accept CNP payments.

The card networks originally introduced chargeback protections to help consumers guard against unscrupulous sellers. Unfortunately, the convenience of initiating chargebacks has led many consumers to do so fraudulently and unnecessarily.

Misuse of chargeback protections paired with real instances of true fraud can be damaging to merchants. As many as 86% of all chargebacks are cases of friendly fraud, resulting in losses that will surpass $31 billion by 2020. It can be a headache to untangle true and friendly fraud, which is why working with a processing partner can streamline the process and save merchants millions.

Most payment processors leave merchants to fend for themselves when it comes to chargebacks, only participating by passing through fines and fees incurred from acquiring banks and the card brands. However, some reputable payment processors will provide expert chargeback management, helping you reign in chargeback ratios and avoid costly fines and fees.

These processors help merchants mitigate such risks by implementing adequate chargeback and fraud prevention tools and by acting as an intermediary should any chargeback issues arise.

Committed Customer Support

Technical hitches are pretty standard in the world of computers and software. Even a stable ecommerce site paired with a seemingly solid payment processing solution can run into issues from time to time.

Online merchants, in particular, have no room for failure when it comes to payments acceptance. Any downtime at all can mean the difference between tens to hundreds of thousands of dollars. Working with a payment processor that offers 24/7 customer support can save merchants millions in the long run.

This is especially true during peak seasons. The holiday selling season and other product-specific peak periods can be especially damaging times for payment gateways to go down. With sales volume highly dependent on reaction time, such a crisis requires immediate mitigation. Your payment processor should have always-on availability, whether through email, chat, phone, or video chat.

Cross-Channel Flexibility

Your website is only a fraction of your business empire. If you intend to fully leverage the web for optimal growth, you need to be able to sell across other platforms. Social media sites, for instance, are promising hunting grounds for new prospects and customers.

Additionally, with overall global payment preferences spread among eight different online payment options, your processing partner should be able to provide multiple payment methods across the omnichannel.

Be sure your processing partner supports multi-channel integration along with a wide spread of payment options. This may include mobile app payments, which are becoming increasingly popular both in addition to and as an alternative to mobile web payments.

Conclusion

In the end, as they say, cheap is expensive and expensive is cheap. Only businesses willing to invest in the right payment resources will have the best tools for protection and increased growth.

So feel free to get in touch with us today, and let’s help you set up an effective payment solution at some of the best rates in the industry.

Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Uncategorized

payment-processing
The Benefits of Cash Discount Programs for Merchants
When you combine merchant fees with dynamic interchange fees issued by credit card companies, accepting credit cards can be costly and confusing for a small, growing business.

Customers often want to use their preferred method of payment, so not offering credit card payments isn’t an option.

First, let’s dig into the different types of fees before determining if a cash discount program is right for you.
- Merchant fees are typically flat rate fees paid by the merchant to the issuer of the point-of-sale (POS) terminal every time you run a transaction.
- Interchange fees, which are levied by the credit card companies, often include a flat rate transactional fee plus a percentage of each transaction.
How do Customers Typically Want to Pay for Goods?

There isn’t a one-size-fits-all answer. It depends on a variety of factors.

A 2016 study of 1,000 consumers indicated that “40 percent chose credit cards, while 35 percent selected debit cards and only 11 percent specified a preference for using cash.”

But as soon as you factor in considerations like transaction value or even store type, those numbers change dramatically.

It’s important to consider your average transaction value and business type when determining whether a cash discount program may be right for your business.

If you’re a business with a low average transaction value, like a nail salon or a coffee shop, merchant and interchange fees can add up to thousands of dollars a month. To combat this monthly expense, some businesses add a surcharge fee when customers pay with a credit card.

Credit card surcharges have somewhat of negative connotation among consumers, and some states even prohibit businesses from charging these fees. The following states don’t allow surcharges:
- Oklahoma
- Maine
- California
- Texas
- Colorado
- Connecticut
- Kansas
- New York
- Massachusetts
- Florida
In some cases, surcharges don’t make business sense. A low average transaction value and high credit card usage among your customer base, it may make sense to implement a cash discount program.

What are the Benefits of a Cash Discount Program?

A cash discount program offers merchants a way to offset tiered fees incurred when running credit card transactions.

A cash discount program allows merchants to implement a service fee (no more than 4% per transaction) to customers that pay via credit card while offering a discount to customer that pay with cash.

Cash discount programs require merchants to provide at least one notification before purchase that service fees are added to purchase, though multiple points of notification are recommended. Information about the service fees must also be included on customer receipts.

A cash discount program often encourages many customers to pay cash, which in turn reduces the transaction volume fees you incur from the credit card companies, your bank, and the terminal leasing fee needed to run credit cards.

In fact, you can use the money you save and your additional cash flow to reinvest in your business—something your customers will likely appreciate. If you’re a coffee shop, for example, you can use your new cash flow to make WiFi free or add a few comfortable couches for your guests to relax in.

If you’re considering a cash discount program, you will need a specialized vendor. Look for a vendor that has a varied fee structure that works with your business and average ticket size. This is rapidly growing subset of payment processing, so there is an abundance of companies to choose from.

How to Select a Cash Discount Program Vendor

Do your due diligence and ask potential vendors how much their customers save on average. You may also ask to view a sample receipt and check out their BBB rating. Your vendor’s technology should allow you to accept all credit card types, mobile wallets and EMV chip cards. Finally, make sure they disclose all fees to you.

Pricing usually comes in two forms; a flat rate, which works great for high transaction volume but low average transaction value, or a percentage of sale, which is ideal for businesses with a high dollar transaction value. Also, your vendor might offer free in-store signage to make your customers aware of the change.

PayArc has recently launched our Cash Discount Program, and we’re looking for motivated merchants to partner with. If you’ve been considering implementing a cash discount program, contact us today so we can show you the incredible savings we can provide.
Payarc

November 15, 2021

Fraud Prevention, Industry Insights, Security

payment-processing